Protecting Nonprofit Nonpartisanship | Legislative Challenge

Submitted by Tiffany Gourley Carter on Thu, 05/18/2017 - 10:53am

House Hearing Promotes Weakening/Repealing the Johnson Amendment

A congressional hearing, ostensibly to investigate the free speech rights of churches, turned out to be a full-frontal attack on the Johnson Amendment. Witnesses called by the majority party alleged that current enforcement by the Internal Revenue Services is both overly aggressive and non-existent, without apparent awareness of the inconsistency of their positions. They also claimed that the lack of clarity in the law and enforcement create a chilling effect on the free speech of preachers and others who cannot reasonably discern what speech would and would not violate the law.

Rabbi David Saperstein[1], the witness called by the minority party, offered rebuttal testimony demonstrating that most people correctly understand that the Johnson Amendment only prevents express endorsement or opposition to candidates, and that virtually all discussions by religious and nonprofit speakers on moral, public policy, and advocacy matters are proper under the law and Constitution. By all accounts, the House hearing was conducted to showcase legislation to weaken the Johnson Amendment, the euphemistically named Free Speech Fairness Act (H.R.781[2]) discussed below. Learn more about the hearing by watching the recording[3], and reading the additional written testimony submitted by the National Council of Nonprofits[4] and the Baptist Joint Committee on Religious Liberty[5].

Where We Stand

“The National Council of Nonprofits has long held that the public’s overall trust in the sector would diminish and thus limit the effectiveness of the nonprofit community if individual 501(c)(3) organizations came to be regarded as Democratic charities or Republican charities instead of the nonpartisan problem solvers that they are.”

The National Council of Nonprofits has consistently expressed a position in favor of “preserving the integrity of charitable nonprofits by supporting the tax-law ban on electioneering and partisan political activities.”

Take Action

Sign the Community Letter in Support of Nonpartisanship[7]! Join more than 4,500 organizations – charitable nonprofits, religious institutions, foundations, and others from across the country to show that we intend to resist any and all efforts to politicize our sector by weakening or repealing this longstanding protection in federal tax law that keeps 501(c)(3) organizations away from endorsing, opposing, or contributing to political candidates. Once more signatures are collected, this letter will again be delivered to every congressional office, but this time with a stronger showing of support from you and many others.

Make the Calls: Call your Representative and two Senators and tell them to preserve current law that protects charitable nonprofits, including houses of worship, and foundations, as well as the millions of people we serve every day. Letters are good, personal meetings are great, but a phone call from you now is quick, easy, and effective.

Write Letters to the Editor: Correct the record of inaccurate news stories or cheer editors on for taking strong positions in support of nonprofit nonpartisanship by submitting letters to the editor of your local newspapers. It’s also helpful to share why politicizing charitable nonprofits and foundations is a bad idea.

Share on Social Media: Spread your message in support of keeping the Johnson Amendment on social media and tweet at your members of Congress (Sample Tweet: #Nonprofits are effective because they focus on #CommunityNotCandidates. Maintain #JohnsonAmendment).

Status

Scalise/Lankford Bill Would Blow a Large Loophole in Nonpartisanship

Legislation promoted in the House hearing would substantially weaken the law mandating nonpartisanship by allowing leaders of individual 501(c)(3) entities to openly endorse candidates for public office and engage in some partisan electioneering activities. Specifically, the bills sponsored by Representative Scalise (R-LA) and Senator Lankford (R-OK) (H.R. 781[8] and S.264[9], respectively) would legitimize partisan political statements, such as endorsements, that were “made in the ordinary course of the organization’s regular and customary activities in carrying out its exempt purpose,” as in speaking from the pulpit or sending out emails to members and the public. The legislation, unlike the Executive Order, would apply to ALL 501(c)(3) organizations, not just “religious” groups. The only restriction would be that the statements could not result in “the organization incurring not more than de minimis incremental expenses.”

Why It Matters

Legislation to weaken the Johnson Amendment(H.R. 781[8]/S.264[9]) has numerous flaws, from the perspective of nonprofit, religious, and foundation leaders from across the country.

The law protecting nonprofits from partisan demands is considered essential and immutable. Last month, 99 religious and denominational organizations[10] delivered a letter to Congress expressing strong opposition to “any effort to weaken or eliminate protections that prohibit 501(c)(3) organizations, including houses of worship, from endorsing or opposing political candidates.”

Determining what constitutes an organization’s “regular and customary activities” demands as much subjective scrutiny as the IRS’s current “facts and circumstances” test that obfuscates rather than clarifies any legal analysis.

The “de minimis” test offered in the legislation has no meaning in current law, creating speculation, regulations, and litigation. For example, the law on 501(c)(4) organizations requires that funds be “devoted exclusively to charitable, educational, or recreational purposes,” yet the IRS has interpreted “exclusively” to mean no more than 50 percent, making nearly half of a social welfare organization’s assets available for the types of partisan, election-related activities that proponents of the Scalise/Lankford bills are seeking. Further, including a “de minimis” test in the law would invite greater scrutiny by the IRS and others into the financial affairs of churches than current law. That is because most religious institutions are exempted from filing the IRS Form 990, which requires all other 501(c)(3) organizations to disclose how much they receive and how they spend those dollars.

The odd combination of “de minimis” and “incremental” suggest that the amount of expenses could increase over time. Given that de minimis for the Gates Foundation and a local food bank will vary widely, as will the amounts by a mega-church with its televised messages versus those of that same local food bank, the legislation awards an unfair greater partisan voice to larger entities.

Adverse Consequences

If enacted, the legislation would politicize charitable nonprofits, houses of worship, and foundations, plunging them into the caustic partisanship that bedevils our country solely for the benefit of politicians and political operatives. The consequences, including the following examples, could be irreparable:

Donors turn away from some or all charitable nonprofits as the raw partisan actions of a few undermine the appreciation of the sector as the one place safe from political discord.

Nonprofit effectiveness is lost as board members with contrary views divert attention away from mission by arguing that the organization should endorse opposing candidates, whether business clients, family members, or college friends, creating ill-will and polarizing the board on other unrelated issues.

Nonprofit missions are eroded when board members and/or wealthy donors demand that the organization take sides in local, state, or federal elections.

Local college presidents, hospital executives, or preachers send out emails endorsing political candidates to alumni, former patients, or parishioners, thereby distributing a no-cost message (presumably satisfying the de minimis language in the legislation) but inducing candidates, their operatives, and their donors to exert immense pressure (whether lawful and moral, or not) on other nonprofits to follow suit or face repercussions.

Background

Section 501(c)(3) of the Internal Revenue Code[11] allows certain groups – including charitable, religious, and philanthropic organizations – to be exempt from federal income taxes and eligible to receive tax-deductible contributions in exchange for complying with three separate conditions. The first condition is that 501(c)(3) nonprofits cannot pay out profits to benefit shareholders or individuals. The second condition limits the amount of lobbying in which 501(c)(3) organizations can engage. The third condition – the so-called Johnson Amendment -- states that 501(c)(3) entities may “not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” This straightforward language simply means that 501(c)(3) organizations may not endorse or oppose candidates for public office or contribute money, time, and resources to help elect or defeat candidates.1 Other speech, such as commentary on legislation, social and moral issues, is in no way touched or restricted by the Johnson Amendment.